COEXISTENCE IN MAIZE AND SOYBEAN SUPPLY CHAINS IN PORTUGAL C. Trindade, J. Ponte, F. Quedas 19-06-2013 1. 2. 3. 4. 5. 6. 7. Portuguese Supply of Maize and Soybean Interviewees Structure of Supply Chains The Market of Primary Processed Maize and Soybean Supply Chain Deals and Pricing Mechanism GM Products, GM-Free Products and Segregation Conclusions 19-06-2013 Imports, domestic production and exports 19-06-2013 PT supply of grain maize and soybean (103 tons) Grain maize Soybean Year Production Imports Exports Imports 2009 634 1414 31 1190 2010 626 1411 24 1186 2011 832 1602 33 1110 19-06-2013 Maize grain imports: yearly shares of quantity (ton) and value (€) of major origins 19-06-2013 Exports of Portuguese maize and maize products Product Grain Meal 103€ ton By-products 103€ ton 103€ Starch ton 103€ Others (%) Year ton ton € 2009 30,831 7493 4824 1636 3117 1047 1701 640 3% 17 % 2010 23,762 5811 5659 1741 3102 1037 248 120 4% 24 % 2011 33,072 9277 4058 1902 3594 1327 4920 2295 3% 15 % 19-06-2013 Share of soybean products in Portuguese imports 19-06-2013 Yearly shares of quantity (ton) and value (€) of major origins of soybean grain 19-06-2013 Yearly shares of quantity (ton) and value (€) of major origins of soybean meal 19-06-2013 2011 shares of quantity (ton) and value (€) of major origins of soybean oil 19-06-2013 • Association of Maize and Sorghum Producers (ANPROMIS) • Association of Storers, Traders and Importers of Cereals and Oilseeds (ACICO) • Association of Compound Feed Manufacturers (IACA) • Importers: Acembex, Bunge Ibérica Portugal, S.A. and Louis Dreyfus Commodities • Port operator: Silopor • Certifier: Société Générale de Surveillance S.A. (SGS) • Agricultural trading post: AGROMAIS • Wholesaler: Reagro • Crusher: Nutrinveste SGPS, SA., Sovena Group • Mill industries: Atlantic Meals and Carneiro & Campos • Starch industry: Portuguese Company of Starch (Copam) • Compound feed industries: Poultry Company of Center, S.A. (Cac) and pig industry Raporal. 19-06-2013 19-06-2013 Importers and certifiers • Most importers are international marketing companies (Bunge, L. Dreyfus, Noble, Cargill), usually with a very simple local structure. ▫ National: Iberol, Acembex and the Cooperative of Compound Feed Manufacturers’ Supply (Caiaca). • Cost, Insurance and Freight (CIF) imports • Certifiers: SGS and Inspectorate (Bureaux Veritas). • Usually port operators act as service providers, under loyalty agreements. • Tagol and Bunge have a contract à façon, and have a terminal port and elevators of their own. 19-06-2013 Port terminals and operators • Port terminals of Lisbon, held by Silopor and by Oilseed Company of Tejo, S.A. (Tagol): 80 to 90% of maize and soybean imports. • Port of Leixões, in Porto: 10 to 20%. • Small ports (ships up to 5000 tons): Aveiro and Figueira da Foz. • Port operators are liable for: ▫ unloading, weighting, storage and delivery to buyers of the product and quantity indicated by the IMC. • Lisbon - Silopor and Tagol: unloading and storage • Leixões Company of Traffic and Stowage (ETE): unloading; Leixões Elevators (SdL): storage. 19-06-2013 Other players • Wholesalers: ▫ Reagro (80%) and Acembex (15 to 18%) • Crushers: ▫ Sovena (edible oils), Iberol and Torrejana (biodiesel) • Primary processors (maize): ▫ A single starch firm: Copam ▫ Main mills: Atlantic Meals and Carneiro & Campos’ • Feed industry: 125 compound feed manufacturers ▫ Valouro, (15% share), Lusiaves (production of feed and broilers), Saprogal Portugal and Provimi Ibéria: 45 to 50% share ▫ Ten largest firms: 75% share 19-06-2013 Primary processing products are directed to food industry or biodiesel, as feed industry uses 40 to 50% grains (maize and soybean) and 50 to 60% of by-products of mills and crushers. 19-06-2013 Self-supply Imports Crushers Soybean meal Maize growers Exports Wholesalers Feed industry Starch Soybean oil Food industry Biodiesel Farmers’ associations Mills Brewing Integrated Free market Baby food Egg/Broiler Pig Beef/Milk Others 19-06-2013 19-06-2013 Supply Chain Deals • Maize supply of food industry ▫ Trade agreements between maize mills and maize producers’ organizations, both in Portugal and Spain. ▫ Deliveries usually made overland, and storage facilities of producers’ associations or of the mills themselves. • Supply of feed industry and soybean crushers ▫ Dealt with the wholesaler (Reagro) or the importers. 19-06-2013 Pricing Mechanism - 1 • The prices of maize and soybean are established after the Marché à Terme International de France (MATIF), MATIF corn and MATIF soya, the Chicago Stock Exchange and the cost of transport. • Freight rates: ▫ Maize: 20 $/ton (Ukraine) to 35 $/ton (Brazil) ▫ Soybean grain: 28 $/ton (USA) to 30 $/ton (Brazil and Argentina) ▫ Soybean meal: 32 $ to 38 $/ton • Premium price for non-GM maize ▫ Imported maize: 20 to 30 €/ton ▫ Domestic maize: 10 to 20 €/ton 19-06-2013 Pricing Mechanism - 2 • Price of maize by-products: 15% lower than dry grain price. • Some compound feed producers have their feed prices indexed to the stock Exchange of Lleida. • Net margin of compound feed producers’ sales to animal producers: it rates 10% and 20% for, respectively, integrated and non-integrated customers. • Price fluctuations are also effected by energy cost and, for feed, by competition between manufacturers. 19-06-2013 19-06-2013 Labelling and thresholds • In Portugal GM-labelled products include: ▫ All compound feed except organic compound feed ▫ Some soybean edible oil or soybean containing edible oil brands. ▫ No other food product is GM-labelled. • Negative labelling is rare • Non-GM products: ▫ Some food industries do simply comply with the 0.9% threshold, others are intended to be GM-free, and use thresholds as low as 0.01%. 19-06-2013 IP of GM-free products • Port operations are the most problematic for IP of GMfree products: ▫ Non-GM commodities may either be unloaded from cargoships to smaller ships that take them to a different port terminal (Lisbon port, used by Reagro) or be unloaded by non-continuous systems and stored in horizontal silos (Aveiro port, used by Acembex). 19-06-2013 IP by IMC • Neither Dreyfus nor Bunge import GM-free products, though they might import from non-GM producing countries, such as Ukraine. • To prevent risks of non-authorized events IMC follow one of two options: take advantage of their own IP systems in the country of origin or change the country of origin. • IMC are responsible for testing, that is run by certifiers that also oversee the loads, check the cleaning of the ship and check cross-contamination at the port. IMC usually manage certification at corporate level. 19-06-2013 19-06-2013 • Portuguese maize and soybean supply chains are decisively contingent on imports. • Feed industry is by far the major customer of maize and soybean and given its low net margins took the option of GM-labelling its products. • Edible oils are also currently GM-labelled when they contain soybean oil. • Therefore, the bulk of maize and soybean imports does not require segregation of conventional and GM materials, but only demands certification for the absence of EU non-authorized events. • However, millers and starch industry on one hand, and meal and starch importers on the other hand, have to deal with IP of non-GM products, coping with thresholds that might vary between 0.9% and 0.01%. 19-06-2013 • Millers and starch industry mainly rely upon conventional maize domestic or Spanish production, contracting directly with farmers or their organizations, or imports from other European countries, such as Ukraine or France. • In their own processing plants millers and starch industry easily manage to succeed in IP, as they don’t process GM maize at all. • Given the price premiums for non-GM maize, individual farmers and some farmers’ associations look consistently bind to millers, in spite of the absence of integration systems. • On the other hand, maize large demand by feed industry and its GM-labelling option are pushing other farmers to adopt Bt-maize to minimize corn borer damages. 19-06-2013 • As the purpose of this research was a comprehensive look over the supply chains, some minor players haven’t been heard. • In particular, the market niche of maize bread, that involves numerous small millers, will be the focus of the continuation of this research. Another further step will be the comparison of maize and soybean supply chains of different EU and third countries. Thank you very much Grazie mille 19-06-2013 GM-free testing • Besides certifiers’ labs, such as SGS labs in France, GM-free product importers and maize mills also use customers’ reference labs: • Atlantic Meals: Danone lab in Germany • Acembex and Carneiro & Campos’ Mill: Nestlé lab in Italy.